Notice is hereby given that a Meeting of the Te Anau Wastewater Discharge Project Committee will be held on:

 

Date:                            

Time:

Meeting Room:

Venue:

 

Tuesday, 28 November 2017

10.00am

Distinction Te Anau Hotel & Villas
64 Lakefront Drive, Te Anau

 

Te Anau Wastewater Discharge Project Committee Agenda

OPEN

 

 

MEMBERSHIP

 

Chairperson

Mayor Gary Tong

 

Members

Alan Bickers

 

 

Rachel Cockburn

 

 

Shirley Mouat

 

 

Don Mowat

 

 

Allan Youldon

 

Councillor

Ebel Kremer

 

 

IN ATTENDANCE

 

Chief Executive

Steve Ruru

 

Group Manager Services and Assets

Ian Marshall

 

Manager Water and Waste Services

Ian Evans

 

Committee Advisor

Jenny Labruyere

 

Community Parntership Leader

Simon Moran

 

 

 

Contact Telephone: 0800 732 732

Postal Address: PO Box 903, Invercargill 9840

Email: emailsdc@southlanddc.govt.nz

Website: www.southlanddc.govt.nz

 

Full agendas are available on Council’s Website

www.southlanddc.govt.nz

 

 

 


Terms of Reference for Te Anau Wastewater Discharge Project Committee

 

The Te Anau Wastewater Discharge Project Committee shall assist the Southland District Council to progress implementation of the Te Anau Wastewater Discharge Project in accordance with the project scope approved by Council and the Deed of Agreement that it has entered into with Fiordland Sewerage Options.

 

The Committee is required to provide guidance and assistance to the Council as it proceeds with meeting its obligations under the Deed and subsequent implementation of its preferred option.

The specific responsibilities of the Project Committee are to:

a)                   Provide advice on how the Council might progress implementation of the Deed of Agreement it has with FSO

b)                   Provide advice on how it might undertake the investigation of the Smith Block in accordance with the programme and budget approved by Council

c)                   Provide advice on how Council might consult with and communicate with the community, affected parties and other stakeholders in an appropriate manner about the project and the disposal of wastewater generated in Te Anau

d)                   Monitor the progress that is being made in progressing the evaluation of the Smith Block given the regulatory and timeframe constraints within which Council needs to operate. These include the need to ensure that Council has a consented wastewater discharge option available at all times

e)                   Assist with the development of a robust business case for Council consideration in relation to the treatment and disposal systems which should be developed to meet the needs of the Te Anau community into the future

f)                    Monitor the progress that is made in delivering on the overall project, and any sub-projects, relative to the approved milestones, budgets and project scope and business cases

g)                   Provide guidance and where appropriate recommendations to Council, on how any variations between actual and planned delivery might be best addressed

h)                   Ensure that appropriate reporting systems are maintained to provide accurate and timely information to the Committee and Council

i)                     Provide advice to Council on the assessment of project risks and appropriate mitigation strategies given the overall scope of the project

j)                     Assist with providing information to the Te Anau Community Board and the Manapouri Community Development Area Subcommittee on the project

k)                   Recommend to Council any changes to the project objectives, timelines, budget and deliverables that the Committee consider might be required

l)                     Ensure that Committee decisions and processes are well documented in accordance with Council policies and its statutory requirements.

 

The Te Anau Wastewater Discharge Project Committee has delegated authority to provide advice and monitor the progress being made with the project in accordance with the responsibilities outlined above.

 

The Project Committee does not have delegated authority in relation to the following matters:

a)                   The expenditure or committal of Council funds

b)                   Approval of project timetable(s) and budget(s) within which the different stages of the project need to be progressed

c)                   Negotiation and approval of any Land Access, Acquisition or Disposal Agreements

d)                   Approval of the final business case and/or decisions in relation to the type of treatment and disposal systems to be developed

e)                   Approval of the procurement strategy and/or methods to be used for services and other works which need to be progressed as part of the project

f)                    The approval of any tenders or other expenditure associated with the project

g)                   Negotiation, approval or limitation of any other contractual arrangements that Council might have and/or put in place including with its staff.


Te Anau Wastewater Discharge Project Committee

28 November 2017

 

TABLE OF CONTENTS

ITEM                                                                                                                                                                                  PAGE

Procedural

1          Apologies                                                                                                                        5

2          Leave of absence                                                                                                           5

3          Conflict of Interest                                                                                                         5

4          Public Forum                                                                                                                  5

5          Extraordinary/Urgent Items                                                                                          5

6          Confirmation of Minutes                                                                                               5

Reports

7.1         Management Report - Te Anau Wastewater Discharge Project                                          13

7.2         Final Business Case for Kepler Option                                                                                                17   


1             Apologies

 

At the close of the agenda no apologies had been received.

 

2             Leave of absence

 

At the close of the agenda no requests for leave of absence had been received.

 

3             Conflict of Interest

 

Committee Members are reminded of the need to be vigilant to stand aside from decision-making when a conflict arises between their role as a member and any private or other external interest they might have.

 

4             Public Forum

Notification to speak is required by 5pm at least two days before the meeting. Further information is available on www.southlanddc.govt.nz or phoning 0800 732 732.

 

5             Extraordinary/Urgent Items

To consider, and if thought fit, to pass a resolution to permit the committee to consider any further items which do not appear on the Agenda of this meeting and/or the meeting to be held with the public excluded.

Such resolution is required to be made pursuant to Section 46A(7) of the Local Government Official Information and Meetings Act 1987, and the Chairperson must advise:

(i)     the reason why the item was not on the Agenda, and

(ii)          the reason why the discussion of this item cannot be delayed until a subsequent meeting.

Section 46A(7A) of the Local Government Official Information and Meetings Act 1987 (as amended) states:

“Where an item is not on the agenda for a meeting,-

(a)    that item may be discussed at that meeting if-

(i)            that item is a minor matter relating to the general business of the local authority; and

(ii)           the presiding member explains at the beginning of the meeting, at a time when it is open to the public, that the item will be discussed at the meeting; but

(b)             no resolution, decision or recommendation may be made in respect of that item except to refer that item to a subsequent meeting of the local authority for further discussion.”

 

6             Confirmation of Minutes

6.1         Meeting minutes of Te Anau Wastewater Discharge Project Committee meeting , held on  09 November 2017


 

Te Anau Wastewater Discharge Project Committee

 

OPEN MINUTES

 

Unconfirmed

 

 

 

Minutes of a meeting of Te Anau Wastewater Discharge Project Committee held in the Distinction Te Anau Hotel and Villas, Te Anau on Thursday, 9 November 2017 at 10.00am.

 

present

 

Chairperson

Mayor Gary Tong

 

Members

Alan Bickers

 

 

Rachel Cockburn

 

 

Shirley Mouat

 

 

Don Mowat

 

 

Allan Youldon

 

Councillor

Ebel Kremer

 

 

IN ATTENDANCE

 

Group Manager Services and Assets

Ian Marshall

 

Manager Water and Waste Services

Ian Evans

 

Committee Advisor

Jenny Labruyere

 

Community Partnership Leader

Simon Moran

 

E3Scientific

Dr Clint Rissmann

 

 

PUBLIC GALLERY

 

N Duncan, F Olde-Olthof,  S James,  A Paton-McDonald, R  Shaw,  S Walsh,  R Willett
1             Apologies

 

There were no apologies.

 

 

2             Leave of absence

 

There were no requests for leave of absence.

 

 

3             Conflict of Interest

 

There were no conflicts of interest declared.

 

 

4             Public Forum

 

Mr R Willett

 

Mr Willet raised his concern at the prospect of spray irrigation being consented at the Kepler block given the close proximity to the Airport, and believes this would not be acceptable for tourism or in the event of possible development of hanger/accommodation at the airport.

 

5             Extraordinary/Urgent Items

 

There were no Extraordinary/Urgent items.

 

 

6             Confirmation of Minutes

 

Resolution

Moved Member Youldon, seconded Member Mouat 

Confirms the minutes of Te Anau Wastewater Discharge Project Committee meeting, held on 17 October 2017, subject to;

          i.            the inclusion of an apology from Member Youldon regarding the provision of incorrect information

        ii.            the inclusion of emergency management risks to deal with treated discharge in the event of an emergency, also to include that staff were given instruction not to respond to the issue raised.

 

Reports

 

7.1

Management Report - Te Anau Wastewater Discharge Project

Record No: R/17/10/26150

 

Mr Evans, Strategic Manager Water and Waste, presented the report.

1               Mr Evans advised the report is to keep Committee members updated on the progress of works being undertaken within the Te Anau and Manapouri areas that are not necessarily related to the larger discharge consent project. 

2               Mr Evans added  in regard to the Upukerora Flood Protection work Environment Southland has notified the application for consent for gravel extraction below the Upukerora bridge for further consideration by Southland District Council.

3                

 

Resolution

Moved Cr Kremer, seconded Member Cockburn 

That the Te Anau Wastewater Discharge Project Committee:

a)            Receives the report titled “Management Report - Te Anau Wastewater Discharge Project” dated 6 November 2017.

 

 

 

7.2

Development of the Business Case in Support of Kepler Option

Record No: R/17/10/26182

 

4                Mr Evans, Strategic Manager Water and Waste, presented the report.

5               Mr Evans provided an update to the Te Anau Wastewater Discharge Project Committee on the development of the Te Anau Wastewater Business Case.

Mr Evans advised that the business case currently considers scoring of options that can be undertaken under the current consent, or with a variation to that consent. He stated it may be appropriate to review these depending on the outcome of the alternative site selection process but this is a decision that will need to be made by Council at a later date.

6               Mr Evans noted that Council has also called for expressions of interest for possible alternative disposal sites based on a set of criteria that were approved by the Project Committee. This period closed on 11 October with expressions currently being evaluated.

7               Mr Evans added it is anticipated that a draft of the finalised business case will be brought to Council in November 2017 with a decision to be made on whether to grant formal approval by December 2017. The Business Case was updated following comments from Member Bickers and now also includes a procurement plan and timeline which will be further developed to include an evaluation of the risk profile associated with the recommended approach.

8               The Committee was advised that a further review of operating costs and assumptions around baleage and dry matter production was undertaken following discussions between Dr Tony Daveron and a local agricultural business consultant with detailed knowledge of the Southland market.

9               Mr Evans informed that the detailed business case is being developed following the models used by both Treasury and NZTA in support of development of significant infrastructure investment decisions, albeit somewhat modified to reflect the scale of investment and the relatively advanced nature of the project, with inclusion of  guidance and further development from Committee Member Bickers who has reviewed the case on behalf of Committee Members.

10           Mr Evans informed that typically the business case is a multi-stage process based on the following assessments:

·                      Strategic assessment - what is the need?

·                      Economic assessment - generally to demonstrate value for money against any viable alternatives.

·                      Commercial assessment - can it be delivered and what are the options in terms of procurement/delivery models?

·                      Financial assessment - is it affordable and what are the funding sources (loans, contributions etc) referenced through the LTP?

·                      Management assessment - can it be successfully delivered including any further consenting requirements?

 

11           Mr Evans added that the four options considered at Kepler are outlined within the business case document and can be broadly summarised as:

·                        Option 1 Consented Option – pipeline to Kepler with irrigation via centre pivot with provision of land treatment via nutrient uptake through pasture and bacteria die off from both UV radiation from natural sunlight and also as treated wastewater passes through the soil. Additionally odour risk would be controlled by a trickling filter.

·                        Option 2A- this is essentially similar to option 1 with addition of a membrane filter at the oxidation ponds to treat flows up to 2,000 m3. This would provide additional treatment for the majority of occasions.

·                        Option 2B – This is essentially the same as option 1 but with a membrane filter sized to treat flows to the consented peak of 4,500 m3.

·                        Option 3 – This is similar to option 2B with membrane treatment up to peak flow of 4500m3 but with further land based treatment through sub surface drip irrigation rather than centre pivot irrigation.

12           Mr Evans commented that following on from the Committee meeting on 17 October officers have continued to develop Council’s preferred procurement approach which is now included in the draft document. It is anticipated that this will be developed further based on comments from the Committee.

While discussing the report members sought clarification on a number of issues as follows;

-           the cost and effect of the removal of previous estimates in the business case              particularly in regard to the harvest yields and what the flow on effect will look like

-           requested when changes are made as above that they be clearly identified

-           review of Risk Hazard Assessment

-           development of the Procurement Strategy

-           appointment of an independent Probity  Auditor for the assessment

-           further clarification from Dr Rissmann  regrading soil structures, aero and               electromagnetic variances

The Committee was advised that Member Bickers is to be involved with further development and review of the procurement/business case. 

 

Members  requested a detailed presentation for the Committee to focus on  risk analysis, what changes are to be made, and the preliminary stages of the process of the business case review.

 

 

Resolution

Moved Cr Kremer, seconded Member Cockburn 

That the Te Anau Wastewater Discharge Project Committee:

a)            Receives the report titled “Development of the Business Case in Support of Kepler Option” dated 6 November 2017.

b)           Determines that this matter or decision be recognised as not significant in terms of Section 76 of the Local Government Act 2002.

c)            Determines that it has complied with the decision-making provisions of the Local Government Act 2002 to the extent necessary in relation to this decision; and in accordance with Section 79 of the Act determines that it does not require further information, further assessment of options or further analysis of costs and benefits or advantages and disadvantages prior to making a decision on this matter.

d)         Notes the process that is being followed to develop a business case for the
Te Anau
Wastewater Project.

e)         Requests a presentation for the Committee on the review, changes and development of the draft business case.

 

Public Excluded

 

Exclusion of the Public: Local Government Official Information and Meetings Act 1987

Resolution

Moved Cr Kremer, seconded Member Cockburn 

That the public be excluded from the following part(s) of the proceedings of this meeting.

C8.1   Evaluation of Alternative Sites

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

 

 

 

General subject of each matter to be considered

Reason for passing this resolution in relation to each matter

Ground(s) under section 48(1) for the passing of this resolution

Evaluation of Alternative Sites

s7(2)(a) - The withholding of the information is necessary to protect the privacy of natural persons, including that of a deceased person.

 

s7(2)(i) - The withholding of the information is necessary to enable the local authority to carry on, without prejudice or disadvantage, negotiations (including commercial and industrial negotiations).

 

That the public conduct of the whole or the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists.

 

That the staff and Dr Rissmann, E3Scientific, be permitted to remain at this meeting, after the public has been excluded, because of their knowledge of the items Evaluation of Alternative Sites. This knowledge, which will be of assistance in relation to the matters to be discussed, is relevant to those matters because of their knowledge on the issues discussed and meeting procedure.

 

 

The public were excluded at 11.30am

 

Resolutions in relation to the confidential items are recorded in the confidential section of these minutes and are not publicly available unless released here.

 

 

The meeting concluded at 1.25pm                       CONFIRMED AS A TRUE AND CORRECT RECORD AT A MEETING OF THE Te Anau Wastewater Discharge Project Committee HELD ON 9 NOVEMBER 2017.

 

 

 

DATE:............................................................................................

 

 

 

CHAIRPERSON:........................................................................

 


Te Anau Wastewater Discharge Project Committee

28 November 2017

 

Management Report - Te Anau Wastewater Discharge Project

Record No:             R/17/11/28030

Author:                      Ian Evans, Strategic Manager Water and Waste

Approved by:         Ian Marshall, Group Manager Services and Assets

 

  Decision                                        Recommendation                                  Information

 

 

 

Purpose

1        The purpose of this report is to keep Committee members updated on the progress of works being undertaken within the Te Anau and Manapouri areas that are not necessarily related to the larger discharge consent project. 

2        The report will be updated and presented at all upcoming Committee meetings. 

3        This information is up to date as of the week commencing 20 November 2017. Issues or projects reported as complete in previous reports have now been removed if there is nothing further to update the Committee on.

Status Report on Ongoing Work

4       Discharge Consent Application

·                      Consent was granted 15 January 2015.

·                      Three appeals were subsequently lodged with the Environment Court (EC).

·                      Both Council and appellants agreed to participate in court appointed mediation.

·                      Response to EC was lodged by Environment Southland (ES) on 29 May 2015 indicating the position of all parties to the appeal.

·                      Further hold until 18 December, with the expectation this will be extended pending the outcome of the peer review.

·                      Council’s legal advisors reviewed the Pattle Delamore Partners (PDP) report and provided legal advice on implications of the peer review outcomes.  They also prepared a response to the EC.

·                      Court appointed mediation occurred on 20 and 21 June 2016.  An update of the outcome of the mediation process is included in an additional report on the agenda for 6 July meeting.

·                      Appeal settled December 2016 with execution of Deed of Agreement.

·                      Business case in support of consented proposal is being progressed in parallel with the development of criteria to be considered if alternative discharge locations are identified.


 

5       Upukerora Flood Defence Work

·                      ES is proposing flood defence work both upstream and downstream of the Upukerora Bridge.

·                      ES claims that work is necessary to protect both the bridge and Council’s oxidation ponds should the river deviate from its current course.

·                      ES indicates that any significant deviation could cause oxidation ponds to be inundated in the event of a significant flood.

·                      Any flood event will also increase the risk of the Upukerora Road downstream of the ponds being washed out.

·                      Risk of inundation also arises from not managing gravel levels in the river bed.

·                      Currently there is little demand for gravel and as a consequence, levels have increased over those previously measured.

·                      Meeting on 26 May 2015 discussed proposed works.

·                      As an outcome of the meeting, ES will investigate feasibility and costs of a proposed alternative. 

·                      The alternative proposal has been assessed and a draft with costs provided to Council on 24 July 2015. 

·                      Meeting with senior Council and ES staff agreed to delay the decision until the outcome of the peer review is known and understood as this may have implications for the degree of protection work required.

·                      Stakeholder meeting held at ES in December 2016 where expert parties for ES and the River Committee agreed to review proposed options and confirm viability.

·                      A further meeting of stakeholders was held on 19 May 2017. The main outcome of the meeting were that engineering consultants engaged by Environment Southland and the River Liaison Committee were in agreement on the range of issues and effectiveness of potential solutions, both for further work upstream and downstream of the state highway bridge. It was also agreed that an active gravel management programme was also needed downstream of the bridge to ensure the long term success of the flood defence work.

·                      Council received notification of a resource consent application for gravel extraction below the state highway bridge. The application seeks permission to extract up to three sites with a total requested volume of 44,000m3 per year. A submission in support of the application has been forwarded to Environment Southland.

6       Contact Tanks at Te Anau and Manapouri Water Treatment Plants

·                      Full assessment of the condition and serviceability of the contact tanks at both
Te Anau and Manapouri water treatment plants will be undertaken in the upcoming financial year.

·                      Design work to be undertaken in 2017/18 financial year.


 

7       Finance and Risk

·                      Financial estimates and risk registers have been developed and will be presented to the Committee at future meetings once they have been aligned to Council’s Risk Management Policy.

·                      These issues are incorporated in the business case.

Development of Business Case

8          Regardless of which option Council decides to pursue a Detailed Business Case will need to be developed.  The business case would:

·              outline the strategic goals and overall intent of the proposal

·              outline the preferred option and provide an analysis of the costs, benefits and risks of the short-listed options

·              detail a suggested approach to procurement and seek approval to proceed to the next stage of development

·              detail the proposed funding arrangements

·              outline the proposed management arrangements for delivery of the project

·              identify the range of stakeholders who need to be kept informed during the implementation of the project.

 

9          The Te Anau Wastewater Discharge Project Committee has a role to assist with the development of the business case.  The business case, the project budgets and decisions on how the project are to proceed are, however, ultimately decisions for the Council to make.

10        Elements of the business case are currently being drafted and will be presented to the Committee for approval in due course.

11        The approach to using a business case has originated from Treasury and been adopted by a number of organisations to enable justification of large scale infrastructure projects. 
The business case has been reviewed on behalf of the Committee by member Bickers. The finalised business case will be presented to the Committee on 28th November and before Council on 13 December.

 

Recommendation

That the Te Anau Wastewater Discharge Project Committee:

a)            Receives the report titled “Management Report - Te Anau Wastewater Discharge Project” dated 23 November 2017.

 

Attachments

There are no attachments for this report.  

 


Te Anau Wastewater Discharge Project Committee

28 November 2017

 

Final Business Case for Kepler Option

Record No:             R/17/11/28031

Author:                      Ian Evans, Strategic Manager Water and Waste

Approved by:         Ian Marshall, Group Manager Services and Assets

 

  Decision                                        Recommendation                                  Information

 

 

 

Purpose

1        To provide an update to the Te Anau Wastewater Discharge Project Committee on the final draft of the Te Anau Wastewater Business Case.

Executive Summary

2       This report presents the final draft of the business case in support of the options considered for the Kepler site. The business case only considers scoring of options that can be undertaken under the current consent, or with a variation to that consent.

3       The Business Case was considered by both the Services and Assets and Finance and Audit Committees on 15 and 16 November with a number of recommendations and comments noted. The Committee will have seen the majority of the business case at its previous meetings with the final draft version now including financial information and a detailed risk register.

4       The Committee is asked to provide comment on the final draft so that it can be considered by Council at its 13 December meeting.

 

Recommendation

That the Te Anau Wastewater Discharge Project Committee:

a)            Receives the report titled “Final Business Case for Kepler Option” dated 23 November 2017.

b)           Determines that this decision be recognised as not significant in terms of Section 76 of the Local Government Act 2002.

c)            Determines that it has complied with the decision-making provisions of the Local Government Act 2002 to the extent necessary in relation to this decision; and in accordance with Section 79 of the Act determines that it does not require further information, further assessment of options or further analysis of costs and benefits or advantages and disadvantages prior to making a decision on this matter.

d)         Notes the process that is being followed to develop a business case for the
Te Anau
Wastewater Project.

e)         Provides comment on the draft business case attached.


 

Background

5      This report presents an updated final draft Business Case in support of the Kepler Options. Overall, four options have been evaluated with the highest ranking option being the consented proposal. With the exception of the financial section and the risk register Committee members will have previously seen all other information.

The Wastewater Project Committee have previously been advised of the following high level timetable for the development of the business case. The dates in this table represent targeted dates and there is likely to be movement in them as work is progressed and particularly as drafts of the business case are reviewed.

 

Task

Due By

Completed by

Provide TAWC a copy of the business case project problem definition, investment objectives, constraints.

31/8/17

Complete

Advertise alternative site criteria.

1/9/17

Complete

Report to Council on business case project problem definition, investment objectives, constraints.

27/9/17

Complete

Provide to Council the initial business case draft on the Kepler options - as these are the ones that are currently known.

30/9/17

Complete

TAWC meeting to discuss the initial business case draft and get comments.

17/10/17

Complete

Close off date for expressing interest in providing an alternative site.

11/10/17

Complete

Consideration of the alternative sites identified.

25/10/17

Complete

Meeting with TAWC to discuss alternative sites and process from here.

9/11/17

Complete

Committee meeting to present finalised Business Case

28/11/17

 

Business case report to Council  

13/12/17

 

6       The detailed business case has been developed following the models used by both Treasury and NZTA in support of development of significant infrastructure investment decisions, albeit somewhat modified to reflect the scale of investment and the relatively advanced nature of the project.

7       The business case is a multi-stage process based on the following assessments:

·                      Strategic assessment - what is the need?

·                      Economic assessment - generally to demonstrate value for money against any viable alternatives.

·                      Commercial assessment - can it be delivered and what are the options in terms of procurement/delivery models?

·                      Financial assessment - is it affordable and what are the funding sources (loans, contributions etc) referenced through the LTP?

·                      Management assessment - can it be successfully delivered including any further consenting requirements?

8       For the purposes of the current document the above five elements are being combined into one single document with some amendments to headings and terminology. The Economic Assessment, for example, is called an Options Assessment.

9       The Commercial, Financial and Management assessments have been replaced with the Procurement Approach, Financing and Funding Arrangements and Timeframe sections in the final version of the business case. The document has been updated following comments from Member Bickers who has provided comments on behalf of the Committee. 

10     Any business case should clearly identify the problem or issue that is being addressed, the reasons why investment is necessary and the assumptions around what realistic options are available to address the issue/problem. In this instance that is driven by the need to have a new consented discharge operational by December 2020.

11     The latest draft has also been considered by the Services and Assets Committee on 15 November and the Finance and Audit Committee on 16th November.

Issues

12      It is important to reiterate that only what are considered to be the reasonably practicable options are considered. These are based around further treatment and disposal to the Kepler Block given that this is the site that Council currently has consented.

13      The four options considered at Kepler are outlined within the business case document which is included as attachment A and can be broadly summarised as:

·                        Option 1 Consented Option – pipeline to Kepler with irrigation via centre pivot with provision of land treatment via nutrient uptake through pasture and bacteria die off from both UV radiation from natural sunlight and also as treated wastewater passes through the soil. Additionally odour risk would be controlled by a trickling filter.

·                        Option 2A- this is essentially similar to option 1 with addition of a membrane filter at the oxidation ponds to treat flows up to 2,000 m3. This would provide additional treatment for the majority of occasions.

·                        Option 2B – This is essentially the same as option 1 but with a membrane filter sized to treat flows to the consented peak of 4,500 m3.

           Option 3 – This is similar to option 2B with membrane treatment up to peak flow of 4500 m3 but with further land based treatment through sub surface drip irrigation rather than centre pivot irrigation. Further filtration will also be required at the Kepler site to deal with any solids material generated within the pipeline. There may also be a requirement for some odour control from air discharged across the disposal area. Further advice is attached outlining a number of factors that would need to be taken into consideration when looking at a sub-surface irrigation system. This is included as appendix B.

14      The business case further outlines the criteria by which the alternatives were scored relative to each other, with a favoured option being identified. Options were scored independently by each member of an evaluation panel with final agreement of scores agreed through a final ‘arbitration’ process.

15      Following scoring of all options the consented proposal (Option 1) scored as the highest ranked option, with Option 2A scoring only slightly less albeit incurring additional capex of $2.9 million. Option 1 will therefore remain the preferred option recommended to Council.

16      Following on from the Committee meeting on 9 November officers have finalised the document with inclusion of the preferred procurement approach, financial analysis, timeframes for delivery and development of a risk register. 

Factors to Consider

Legal and Statutory Requirements

17      The decision-making provisions of the Local Government Act 2002 apply to the decision as to whether or not Council should approve the Te Anau Wastewater Project business case. These provisions are outlined in Part 6 of the Act and in particular Sections 76 - 81 and 101 are relevant to making a decision. In preparing the business case these sections have been considered, however, it is worth highlighting them specifically in this report.

Reasonably practicable options

18      In broad terms Section 77 requires that the Council assess the advantages and disadvantages of each reasonably practicable option. The extent of consideration given should have regard to the level of significance of the proposed decision.

19      The clear direction provided by the Infrastructure Working Group (IWG) set up to develop a long term strategy for Te Anau was that a discharge to water was no longer acceptable and that if feasible the overall preference was for a land based discharge. This is consistent with Regional Council and Iwi management plans and carries as much relevance today as these plans have evolved and been further developed over time.

20      The Kepler consent is for a land based treatment and discharge option that would result in irrigation of the treated wastewater onto land with further treatment provided as it passes through the soil. This is a common means of managing domestic wastewater discharges across
New Zealand.

21      Council are however, reminded that alternative treatment and discharge options have been considered a number of times throughout the development of the Strategy including in 2012 prior to the preparation of the Resource Consent application and Assessment of Environmental effects, the peer review completed by Pattle Delamore Partners (PDP) in 2015 and with the work undertaken in relation to Sinclair Road.

22      There have been a number of other sites suggested over the last two years and in 2017 Council publicly advertised to see who in the Te Anau basin would formally offer their land for consideration by Council for use as a discharge site. Eight properties along with Council reserves were identified. e3Scientific were engaged to review the soil properties and the broader geomorphology of the sites and their conclusion was that all were unsuitable for slow rate irrigation discharge methods. Two sites might potentially be suitable for a rapid infiltration discharge method but a lot more detailed investigation of the geomorphology would be required as they were in moraine fields and it wasn’t clear what the effect of the hydraulic loading of the discharge would be on current flow paths. e3Scientific also assessed the Kepler Block using the same methodology and concluded that it was the most appropriate discharge site of all of those considered based on its soil and geomorphological properties.

23      On each of the occasions noted above the recommendation made was to progress with the Kepler Option as developed through the Infrastructure Working Group. A timeline outlining the key decision making dates (2005 – 2017) around the strategy and showing when in the process alternatives were discussed and considered is attached to this report (attachment C).

24      In relation to achieving the objective, it is noted that the discharge to the Kepler Block site has been granted the necessary resource consents and designated for the discharge of treated wastewater by a panel of independent Commissioners. In accordance with section 125 of the Resource Management Act 1991 Council is required to give effect to these consents by December 2021 being five years after the date on which FSO withdrew its appeal. A failure to do so, or otherwise seek a formal extension to the date by which the consent needs to be given effect will result in the consents lapsing.

25      Council is not required to construct the Kepler Scheme simply because it has the resource consent. Rather that consent gives Council a right to do so which does not have to be exercised. Alternative Kepler discharge options can be considered if that is the wish of the Council. However, due consideration needs to be given to a number of constraints not least around timelines in relation to expiry of the current Upukerora River discharge consent and the timeframe within which the Council needs to exercise the Kepler consent.

26      When considering alternative Kepler options, it is important to remember that to obtain resource consent they must demonstrate at least the same level of minimal environmental effect as demonstrated through the consent for the Kepler proposal.

Advantages and Disadvantages

27      The business case contains specific detail for comparing the Kepler options and also includes an evaluation of each option using a multi-criteria analysis. Previous evaluation work has also included Council engaging PDP to complete an independent peer review of the consented option and report on its viability.

28      The report confirmed that the Kepler option is viable and does not identify any fundamental flaws. That assessment was consistent with the Independent Hearing Commissioners’ decision that the effects of the discharge on the receiving environment would be less than minor.

29      Fiordland Sewage Options (FSO) lodged an appeal against the resource consent granted for the Kepler option. This appeal was subject to a mediation process.

30      The main outcome from the initial appeal mediation process was that Council undertook to carry out further investigations into the feasibility of utilising sub surface drip irrigation as a viable alternative to the proposed centre pivot irrigation.

31      The resulting report highlighted the advantages and disadvantages of each type of discharge technique and considered the overall viability of each irrigation option. In essence, if an option proved to be viable at one site then it was in all likelihood viable at any alternative site notwithstanding differences in ground conditions, topography etc.  Overall, it identified that each option was a viable option for irrigation of treated wastewater and that factors such as cost and the level of risk would need to be carefully considered when choosing a preferred method of irrigation. These factors are discussed further in the evaluation in the attached business case.

Iwi – Ngāi Tahu

32      A further view to be considered is that of Ngāi Tahu as local tangata whenua. Ngāi Tahu (through Te Ao Mārama Incorporated) has been a key stakeholder in the development of the overall Te Anau Wastewater Strategy initially through involvement with the original Infrastructure Working Party and more recently through membership of the Te Anau Wastewater Discharge Project Committee.

33      Throughout the development of the overall wastewater strategy, Ngāi Tahu have been consistent in their message that direct discharges to water are unacceptable and should not be considered. This view has been a factor in the decision to pursue the Kepler consented option as well as a matter that was taken into account in the consideration of potential alternatives.

34      The views of Ngāi Tahu within the Lake Te Anau catchment are particularly relevant because under the Ngāi Tahu Claims Settlement Act 1998 Te Ana-au (Lake Te Anau), Moturau (Lake Manapouri), and the Waiau River are statutory acknowledgement areas. This means that the consenting authorities need to have regard to the statutory acknowledgement in the processing of any consents. Their views are also relevant under section 77(1)(c) of the Local Government Act 2002.

35      At the Te Anau Wastewater Discharge Project Committee of 6 July 2016, Committee Member Mowat provided an outline of the Ngāi Tahu perspective on wastewater treatment and discharge. In general terms the discharge of wastewater to waterways irrespective of the level of treatment provided is considered unacceptable to Iwi and should be avoided. Of equal importance is the nature of land form and the permeability of soil structure and hence the length of time the discharge will take to reach the receiving environment. The statement tabled by Mr Mowat is attached to this report (attachment D).

Community Views

36      Under Section 78 of the Local Government Act 2002, the Council is required to consider the range of community views that might exist in making any decisions. Section 78(3) makes it clear that this requirement alone does not require Council to undertake a community consultation process to enable an understanding of the range of views to be developed.

37      There are a number of different groups or sections of the community whose views need to be considered. These include:

·     The residents and communities of Te Anau and Manapouri. FSO is an organisation that purports to represent the views of a number within these communities.

·     The district wastewater user community who will be required to fund the final solution.

·     All district ratepayers who ultimately carry a level of responsibility and risk for all Council activities.

·     Iwi Māori. Note that also under section 77(1)(c) there is a requirement for the Council to take into account the relationship of Maori with their ancestral land and waters if the decision being made is considered to be significant. It is clear that a decision about how to dispose of wastewater for a community of the size of Te Anau is such a decision.

·     Stakeholder groups and organisations with an interest in the Te Anau Catchment.
These include Fish and Game NZ, Guardians of the Lake and Department of Conservation.

38      It is clear that there are a number of people within the Te Anau and Manapouri communities who are concerned about the current Kepler consented option. Over the last two years FSO has made it clear that they have a strong preference for the level of treatment to be significantly increased and for the final discharge to occur at a site other than the Kepler. More recently FSO have indicated that regardless of the level of treatment of the wastewater they do not support the use of centre pivot irrigation but prefer it to be disposed of through a sub-surface discharge field.

39      As part of the resource consent process, FSO and others have raised a number of environmental concerns about the Kepler proposal. The fact that consent was granted means it is reasonable for the Council to assume that the environmental issues have been appropriately considered and addressed as part of the resource consent process.

40      The Te Anau Community Board supported the development of the Kepler scheme including purchasing the land from Landcorp. Subsequently however, in 2016, after the resource consent had been appealed the Board formally resolved not to support the Kepler option. At the same time the Manapouri Community Development Area sub-committee (Manapouri CDA) also made a similar resolution. Both committees have commented on potential environmental effects, the desire to treat the wastewater a higher level, and that it would be better if a discharge site could be found closer to Te Anau.

41      Given that the wastewater activity is treated as a district wide activity, and funded accordingly, it is appropriate that the Council also consider the views of other wastewater users and district wide ratepayers, in general, as they are also required to fund the costs and risks associated with the options chosen by the Council.

42      The Kepler option has been identified as Council’s preferred option in previous Long Term Plans and therefore has been subject to community consultation via the drafts of these documents. Council will have considered the views expressed in adopting the Kepler option.

43      It is reasonable to expect that, in addition to appropriately addressing the environmental impacts of any proposal, there will be ratepayers who also expect the Council to manage the financial aspects of the project in a prudent and cautious way.

44      The Guardians of the Lakes have been involved from early in the process as part of the Infrastructure Working Group and supported the Kepler scheme. They have, however, also expressed concern over the length of time taken to implement a solution.

45      As an indication of how Council has considered community views the following points illustrate additional work commissioned in order to address issues raised by stakeholders:

·        A Pattle Delamore Partners peer review of the early MWH reports

·        Preparatory investigation and initial consultation with landowners on Sinclair Road (a potential alternative site)

·        Greater spatial sampling of the northern Kepler Block to further assess the possibility of iron pans

·        A review of the baleage component of the business case with an independent agriculture consultant nominated by the Te Anau Discharge Project Committee members

·        A public advertisement seeking alternative sites using criteria agreed by the Te Anau Discharge Project Committee

·        An assessment by e3Scientific of the alternative sites offered for consideration.

46      In conclusion, disposing of treated wastewater is an emotive issue for communities and it is understandable that there are people who are unhappy with what is proposed. It is also important to note however, that there are others in the community who just want Council to make a decision and get on with implementing that decision as the Te Anau community needs a suitable long term discharge option.

Financial Management Principles

47      Section 101 of the LGA relates to financial management and requires:

(1)  A local authority must manage its revenues, expenses, assets, liabilities, investments and general financial dealings prudently and in a manner that promotes the current and future interests of the community.

(2)  A local authority must make adequate and effective provision in its long-term plan and in its annual plan (where applicable) to meet the expenditure needs of the local authority identified in that long-term plan and annual plan….

48      In developing the standard performance indicators, which are included in the financial prudence regulations, the Department of Internal Affairs[1] commented on the financial prudence requirement in the Local Government Act 2002 as follows:

Prudence in a financial context is used to convey a sense of financial restraint, but

balanced by a sense of weighing up and consideration of both the present and future

implications of financial decisions.

 

The Department considers three components of financial prudence can be identified

for the purposes of these regulations. These are:

·       affordability – if elected members act as trustees for their community, then prudence extends from what is prudent for the local authority, as an organisation, to what is prudent for the community as a whole. This needs to include considerations of what the community can reasonably afford;

·       sustainability – a local authority should manage its finances in a manner which are sustainable in the long-term. This will include having the financial capacity to deal with unexpected events and external shocks; and

·       predictability – this requirement is already expressed in the LGA02. Section 102 states that the local authority’s revenue and financing policies are to “provide predictability and certainty about sources and levels of funding.” Lack of predictability suggests weak financial management practices within the local authority concerned, especially where projects or programmes go significantly over budget. This would be an indicator of financial risk to ratepayers and could lead to imprudent outcomes.

49      In addition to the above dimensions it is suggested that financial prudence could also be seen as having a ‘prioritisation’ or ‘allocations’ dimension. In this regard the Council needs to be satisfied that allocating available resources against this particular service or project represents an appropriate use of those available financial resources. 

Discussion 

50      The attached business case outlines four different options that each have different financial cost and risk profiles. Given the level of capital expenditure involved (ie between $14.7 million and $21.8 million) it is clear that the decision is significant. As such the financial cost of the project and overall affordability are important considerations.

51      Section 5.3 comments on the overall affordability aspects and notes that rates in a number of communities that pay a wastewater rate are at, or are approaching, the affordability threshold of 5% of household income suggested by the Independent Inquiry into Local Government Rates. In looking at these affordability measures it is also important to recognise that these calculations do not include a number of other pressures on Council rates that are coming through from other projects/priorities that are being reflected in the 2018 Long Term Plan. These include, for example, the need to improve the quality of wastewater and stormwater discharges in other Southland communities that will also be paying for the Te Anau scheme given that wastewater is funded on a district wide basis.

52      The sustainability and predictability dimensions are issues that are best addressed in reviewing the Council’s financial forecasts through the Long Term Plan process. In relation to the Te Anau wastewater project Council already come to the view that it was sustainable for it to allocate $12.8 million to this project through the 2015 Long Term Plan. The $14.7 million option is being included in the draft 2018 Long Term Plan.

53      To balance the financial cost factor with other relevant considerations the attached business case uses a multi-criteria analysis that considers the economic, environmental, cultural and social aspects of the different options. This analysis is a useful tool for informing Council’s decision-making process.

Costs and Funding

54      At this stage the draft 2018-28 Long Term Plan (LTP) includes a budget of approximately $14.7 million. This is the cost estimate included in the business case for the preferred option, with inflation added for year two. The updated business case identifies additional capital expenditure required from the amount included in the 2015-25 LTP to complete the work. This has arisen largely as a result of review of contract rates and additional scope around pipeline design.

55      Also included in the draft 2018-28 LTP are changes to the operational expenditure included based on the business case.  These costs have changed from the 2015-25 LTP.  The most significant operational cost change is that the cut and carry operational will break even rather than produce a surplus that can be used to offset any other costs.

56      All operational expenditure is funded directly from rates in the year that it is incurred.  Capital expenditure is to be funded from available development contributions and depreciation reserves, with the remainder funded by loans over 30 years.  The loans are serviced directly from the district wastewater rate.


 

57      The impact of the preferred option on the district wastewater rate (along with all other work programmed) in the draft 2018-28 LTP is:

Year

2018 /19

2019
/20

2020
/21

2021
/22

2022
/23

2023
/24

2024
/25

2025
/26

2026
/27

2027
/28

Percentage increase

2.15%

2.56%

9.51%

0.86%

5.50%

5.59%

6.50%

2.44%

2.01%

2.32%

Rate (excl GST)

$397

$408

$446

$450

$475

$502

$534

$547

$558

$571

58     The GST exclusive rate for district wastewater in 2017/18 is $389 and increases to $571 in 2027/28.  Residential ratepayers are impacted by GST inclusive rate of $448 in 2017/18 increasing to $657 in 2027/28.

Policy Implication

59      It is noted that procurement of the preferred option will be undertaken in line with Councils current Procurement Policy.

60      The funding mechanisms proposed are in line with the current Revenue and Financing Policy.

61      Council’s external debt levels, as a result of this project, will be in line with Council’s Investment and Liability Management Policy.  The policy requires that net external debt not exceed 100% of total revenue.

Project Committee Feedback

62      Member Bickers has undertaken a critical review of the business case and has offered a number of suggestions as to how it can be improved. These changes have been incorporated into the working drafts and into the finalised version.

63      Committee Members now have the opportunity to make comments on the final business case which will be noted and included in the covering report to Council on 13 December. 

Analysis

Options Considered

64     The options considered are to provide comment on the final business case which will be included in the covering report to Council on 13 December (Option 1) or Do Nothing (Option 2).

Analysis of Options

Option 1 – Provide Comment

Advantages

Disadvantages

·        Enables the Committee to bring to Council’s attention any relevant matters that Council should consider in making a decision on the business case.

·        None identified.

Option 2 - Do Nothing

Advantages

Disadvantages

·        None identified.

·       Business case may not fully reflect all relevant matters.

·       Council will not have the benefit of receiving comment from the Committee.

Assessment of Significance

65      The decisions that Council is making on how to proceed with the development of a new long term solution for the disposal of Te Anau Wastewater is significant. It involves a significant level of capital investment on an important piece of Council infrastructure.

66      Through this report the Committee is being kept informed of the process to date and planned next steps through to the completion of the business case stage of the project. They are also being asked to provide comment on the final draft of the business case.  As such the report is largely an administrative information gathering exercise.  As such it is reasonable to conclude that the decisions that the Committee is being asked to make through this report are not significant.

Recommended Option

67      It is recommended that the Committee provide feedback on the final draft business case and that it is included in the covering report to Council. 

Next Steps

68      Work will continue with drafting the covering report to Council for its meeting on 13 December.

 

Attachments

a             Business Case - Te Anau Wastewater Scheme - Kepler Option

b             NT Client 39 SDI Factors for Consideration

c             Te Anau Wastewater - Timeline Documenting Strategy Development

d            Te Ao Marama Incorporated Cultural Statement - Te Anau Waste Water Discharge    

 


Te Anau Wastewater Discharge Project Committee

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[1] Proposed Local Government Financial Prudence Regulations, Regulatory Impact Statement, 24 October 2013